Oil prices head for big weekly loss as supply fears wane

Key oil freight rates from Middle East to Asia rocket as much as 28%

Reuters September 27, 2019
Key oil freight rates from Middle East to Asia rocket as much as 28%. PHOTO: REUTERS

LONDON: Oil prices fell on Friday and were heading for a weekly loss on a faster-than-expected recovery in Saudi output while slowing Chinese economic growth dampens the demand outlook.

Brent crude fell $0.93 to $61.81 a barrel by 1102 GMT while US crude slipped by $0.65 to $55.76. Both were down almost 4% over the week, representing WTI's biggest weekly loss in 10 weeks and Brent's biggest in seven.

Brent and WTI were also hit by a Wall Street Journal report citing unnamed sources as saying that Saudi Arabia had agreed a partial ceasefire in Yemen, said analysts in the Reuters Global Oil Forum.

Brent is just above its level before attacks on Saudi facilities on September 14, which initially halved the kingdom's production.

Sources told Reuters this week that Saudi Arabia had restored capacity to 11.3 million barrels per day. Saudi Aramco has yet to confirm it is fully back online.

"The risk premium is deflating further," said Saxo Bank's Ole Hansen.

The International Energy Agency (IEA) said on Friday that it might cut its estimates for global oil demand for 2019 and 2020 should the global economy weaken further.

"If the global economy weakens, for which there are already some signs, we may lower oil demand expectations," IEA Executive Director Fatih Birol told Reuters.

In China, the world's second-largest economy and biggest importer of crude oil, industrial companies reported a contraction in profits in August.

A surprise 2.4-million-barrel build in US crude inventories last week also weighed on prices.

Key oil freight rates from the Middle East to Asia rocketed as much as 28% on Friday in the global oil shipping market, spooked by US sanctions on units of China's Cosco for alleged involvement in ferrying crude out of Iran.

Cosco vessels are equal to about 7.5% of the world's fleet of supertankers, Refinitiv data showed.

Emerging details connected to the impeachment inquiry into US President Donald Trump also helped to dent demand sentiment, analysts said.


Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ